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Simplified customs entry procedures from 1 January 2021: is it merely a case of writing it down?

Simplified customs entry procedures from 1 January 2021: is it merely a case of writing it down?

The UK Government have announced that as of 1 January 2021 there will be a six-month period in which businesses can delay submitting a customs declaration and defer paying any relevant customs duty for up to six months. This is in order to assist business in transitioning to full customs formalities when dealing with European Union (EU) importations.

Most businesses are aware that even with a comprehensive Free Trade Agreement (FTA) customs documentation will be required at the frontier – either pre-lodged or rendered subsequently after importation according to current customs requirements – on importations from ‘Third Countries’. This a marked difference to the current Single Market arrangement with the EU on the movement of goods. As of 1 January 2021, the EU and UK will be ‘Third Countries’ to one another. The UK will be treated as outside the EU customs union and its Common External Tariff. Likewise, the EU bloc will be subject to the new UK Global Tariff, the same as the rest of the world.

HM Revenue & Customs (HMRC) have lifted the idea of this ‘simplified entry’ benefit to importers from existing available customs regimes, such as within Customs Freight Simplified Procedures (CFSP). The principle of delaying customs formalities already exists and is open to many qualifying businesses. These businesses are allowed to bring goods into the UK and simply enter the details of these movements in their own business records (‘Entry Into Declarant’s Records’ – previously called ‘Local Clearance Procedure’) or via a Simplified Declaration Process (SDP) at the frontier. A Supplementary Declaration containing the full details of the movement is then usually submitted to HMRC some days later away from the frontier. In the proposed scenario, these Supplementary Declarations would be made up to six months later.

However, this EIDR/SDP process must take place at certain ports and points of entry to allow HMRC to keep track of the movements and protect Treasury revenues. It is unclear from current guidance whether this proposed simplified process for all importers of non-controlled goods (i.e. not alcohol, tobacco or certain other controlled goods) will be allowed at all ports and airports around the UK or remain restricted to those certain locations.

Additionally, participation in the existing EIDR/SDP regime is closely monitored and must be authorised by HMRC (The Customs (Import Duty) (EU Exit) Regulations 2018 reaffirms this). However, the details and processes of the policing of this ‘new’ EIDR/SDP regime up to July 2021 is unclear. It is presumed that businesses will have to register to use the new EIDR/SDP and be in possession of their own Duty Deferment Account (DDA) – backed by a financial guarantee to a suitable level of risk – or have access to their intermediaries DDA, as they currently do in order to operate EIDR.

In any event, the introduction of an importation regime for UK importers using a simple method of recording inbound movements in their own records to delay frontier declarations and payment, is not as straightforward as is heralded. Unless HMRC are willing to risk vast amounts of revenue by not assessing and not restricting access to the simplified process to those who it feels will abuse it, they will have to authorise and oversee even more importers than they do now. A momentous challenge for six months and beyond.

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This article is taken from the latest edition of our Brexit Insights newsletter, our summary of Brexit updates designed to ensure you have a better understanding of how the UK leaving the EU may affect you as a private individual, a business, or both. If you would like to receive future editions of this publication, please register on our insights page here.

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For more information, please contact Simon Sutcliffe.